Tag: fee-shifting

Paralegal Fees Can Be Tacked On to Attorney Fees Sanctions Award – IL First Dist.

Aside from its trenchant discussion of the constructive fraud rule in mechanics lien litigation, the Illinois First District in Father & Sons Home Improvement II, Inc. v. Stuart, 2016 IL App (1st) 143666 clarified that a paralegal’s time and services can be added to a claim for attorneys’ fees as a sanction against a losing party who files false pleadings.

In an earlier post, I discussed how the lien claimant in this case lost its lien foreclosure suit for misstating the completion of work date and inflating the monetary value of work and materials it affixed to the subject site.  The property owner and a lender defendant filed a fee petition and sanctions motion, respectively.

Examining the lender’s motion for Rule 137 sanctions, the Court stated some black-letter rules that govern fee petitions:

  • Under Rule 137, a party can recover attorneys’ fees incurred as a result of a sanctionable pleading or paper (one filed without an objectively reasonable legal basis);
  • Typically, “overhead” expenses aren’t compensable in a fee motion.  The theory is that overhead costs are already built into an attorneys’ hourly rate;
  •   Overhead includes telephone charges, in-house delivery charges, photocopying, check processing, and in-house paralegal and secretarial services;
  • However, when a paralegal performs a specialized legal task that would normally be performed by an attorney, the paralegal’s fees are recoverable since those services would not be considered overhead.

The Court found that the lender’s paralegals performed myriad services that would normally be done by an attorney – namely, researching the title history of the subject property and preparing a memorandum summarizing the title history.  By contrast, a paralegal’s general administrative tasks were disallowed by the court and could not be sought in the sanctions motion.

Afterwords:

When preparing a fee petition, the prevailing party should also include paralegal time and services; especially if they involve researching real estate land records and summarizing a title history.  While the line separating legal services (which are recoverable) and administrative or overhead expenses (which aren’t) is blurry, Father & Sons stands for the proposition that a fee petition or Rule 137 sanctions motion can be augmented by paralegal fees where the paralegal performs specialized work that contains an element of legal analysis.

 

No Course of Dealing In Trucking Dispute – Attorneys’ Fees Language in Invoice Not Binding On Transport Co. (IL ND)

C&K Trucking, LLC v. AGL, LLC, 2015 WL 6756282, features a narcotic fact pattern and this legal issue: Can boilerplate “legalese” in an invoice create binding contract rights against the invoice recipient?

Whether the mere mention of this topic is sleep inducing will depend on the person.  But what I can say is that the question is a pertinent one from a commercial litigation standpoint since it continues to crop up pretty regularly in practice.

I’ve represented parties trying to enforce favorable invoice language while at other times, defended against one-sided invoice terms.  The main issue there, like in today’s featured case, is whether there was a meeting of the minds on the disputed invoice language.

The plaintiff transportation broker in C&K Trucking sued to recover damages for unpaid cargo brokerage services. The broker’s damages action was based on invoices that provided it could recover unpaid amounts in addition to interest and attorneys’ fees.

The problem was that the broker didn’t send its invoices until after it performed under a series of oral contracts with the trucking firm defendants.

The contracting chronology went like this: plaintiff broker verbally hired the defendant to transport cargo for the plaintiff’s clients.  Once the defendants delivered the cargo and was paid by the broker’s clients, the broker sent the defendants invoices that contained the disputed fee-shifting terms.

Defendants moved for summary judgment that the invoice attorneys’ fees provision weren’t enforceable since they (defendants) never agreed to fee-shifting at the outset.  The Northern District agreed and granted defendants’ summary judgment motion.  In doing so, the court relied on some fundamental contract formation principles and reiterated the quantum of evidence needed to survive a summary judgment motion.

In Federal court, the summary judgment movant must show the court that a trial is pointless – that there’s no disputed issue of fact. Once the movant meets this burden, the non-moving party must then show that the affidavits, depositions and admissions on file do in fact show there are “material” disputed facts that should be resolved at trial.

A disputed fact is material where it might affect the outcome of the suit. But a metaphysical doubt isn’t enough. If the evidence doesn’t show a true factual dispute, a summary judgment will be granted.

To establish the formation of a valid contract in Illinois, the plaintiff must prove there was an offer, an acceptance and valuable consideration.  The plaintiff must also establish that the contract’s main terms were definite and certain.

Any one-sided attempt to change terms of a contract by sending an invoice with additional terms that were never discussed by the parties will normally fail to create an enforceable contract. 

An exception to this applies where there is a course of dealing between the parties.  A course of dealing is defined as a continuous relationship between parties over time that, based on the parties’ conduct, reflects a mutual understanding of each party’s rights and duties concerning a particular transaction.  A course of dealing under contract law can inform or qualify written contract language.

In this case, the plaintiff argued that the defendants’ years-long pattern of accepting and paying plaintiff’s invoices established a course of dealing and evinced defendant’s implied acceptance of the invoice contents.  The court rejected this argument since there was no evidence that defendants ever paid the plaintiff’s attorneys’ fees through the life of the verbal contracts.  The court also pointed to the fact that defendants disputed many of plaintiff’s invoices as additional proof that there was no tacit acknowledgement by defendants that it was responsible for plaintiff’s attorneys’ fees.

Afterwords:

The key lesson from the factually unsexy C&K Trucking case is that boilerplate fee-shifting invoice terms sent after the contract is performed generally aren’t enforceable. There must be a meeting of the minds at the contract formation stage to allow fee-shifting.

A course of dealing based on the parties’ past conduct can sometimes serve as a proxy for explicit contract terms or a party’s acceptance of those terms.  However, where the parties’ prior transactions do not clearly show mutual assent to disputed language, the breach of contract plaintiff cannot rely on the course of dealing rule to prove a defendant’s implied acceptance.

 

 

 

Court Slashes $25K From $30K Attorneys Fees Request Where Plaintiff Loses Most Claims (ND IL)

timesheet

After winning one out of nine claims, the plaintiff – a recently fired loan officer – sued to recover about $30K in attorneys’ fees under the Illinois Wage Payment and Collection Act (IWPCA) from his former employer. 

Awarding the plaintiff just a fraction (just over $5K) of his claimed fees, the Northern District in Palar v. Blackhawk Bancorporation, 2014 WL 4087436 (N.D.Ill. 2014), provides a gloss on the factors a court considers when assessing attorneys’ fees.  The key principles:

 – the lodestar method (hours worked times the hourly rate) is the proper framework for analyzing fees in a IWPCA claim;

– a court may increase or decrease a lodestar figure to reflect multiple factors including (i) the complexity of the legal issues involved, (ii) the degree of success obtained, (iii) the public interest advanced by the suit);

– the key inquiry is whether the fees are reasonable in relation to the difficulty, stakes and outcome of the case;

– a court shouldn’t eyeball a fee request and chop it down based on arbitrary decisions though: the court must provide a clear, concise explanation for any fee reduction;

– an attorneys’ reasonable hourly rate should reflect the market rate: the rate lawyers of similar ability and experience charge in a given community;

– “market rate” is presumably the attorney’s actual billing rate for comparable work;

– if the attorney has no bills for comparable work to show the court, the attorney may instead (a) submit supporting affidavits from similarly experienced attorneys attesting to the rates they charge clients for similar work, or (b) submit evidence of fee awards the attorney has received in similar cases;

– once the fee-seeking attorney makes this market rate showing, the burden shifts to the opponent to demonstrate why the Court should lower the rate;

(**4-5).

The Court then set down the governing rules that apply when a plaintiff wins some claims and loses others; and how that impacts the fee award calculus:

– a party may not recover fees for hours spent on unsuccessful claims;

– where the successful and unsuccessful claims involve a common core of facts and are based on related legal theories, time spent on losing claims may be compensable: litigants should be penalized for pursuing multiple and alternative avenues of relief;

– when reducing a fee award based on certain unsuccessful claims, the court should identify specific hours to be eliminated;

– attorneys can recover fees incurred in litigating the fee award those fee petition fees must not be disproportionate to the fees spent on litigating the merits;

– the Court should consider whether hours spent on the fee request bear a rational relationship to the hours spent on the merits of the case;

– the Seventh Circuit recognizes 15 minutes per hour ratio of fee hours vs. merits hours as excessive (so 1 hour on fee issue for 4 hours on merits would be disproportionate).

(*5).

With these guideposts in mind,  the Court reduced plaintiff’s claimed fees by deducting (a) fees spent on unsuccessful and unrelated (to the IWPCA count) claims; and (b) fees incurred litigating the fees dispute. 

The combined reductions amounted to almost $25K out of the $30K plaintiff claimed in his fee petition.  The Court held that a $5K fee award on final compensation of about $1,500 was justified given the IWPCA’s mandatory fee provision and stated policy of deterring employers from refusing to pay separated employees’ wages.

Afterwords:

There is no precise formula governing fee awards.   The court will consider the amount claimed versus the fees sought and whether they are congruent with those figures. 

This case also illustrates that a court will look at how many claims the plaintiff won and lost in the same case when fashioning a fee award.